Music Business Faculty Explore Streaming Services Debate

By
Mike Keefe-Feldman
February 12, 2014
Music Business/Management Department chair Don Gorder
Associate professor Andrea Johnson
Associate professor George Howard presents for Berklee Teachers on Teaching.
Photo by Mike Keefe-Feldman
Photo by Mike Keefe-Feldman
Photo by Mike Keefe-Feldman

The music industry is awash in a sea of discussion about streaming services, so it's no surprise that that conversation is particularly vibrant at Berklee. As streaming music platforms continue to evolve, Berklee music business faculty present students with an array of different perspectives on this pressing issue. 

George Howard: Artists Should Utilize Streaming for Value Beyond Money

At a recent presentation as part of the Berklee Teachers on Teaching (BTOT) series, Berklee associate professor of music business/management George Howard noted that interactive subscription streaming services such as Spotify and the newly launched Beats Music are “absolutely replacements for sales.” In his lecture, Howard suggested that artists should broaden the scope of how they look at the benefits that they may be able to extract from streaming services. 

In the case of Spotify, an artist can typically expect approximately .0003 cents per play of a song. “Rather than focusing on streaming services as revenue drivers, use them for more value-added purposes because right now the revenue is so puny,” says Howard, who teaches Berklee courses focusing on copyright law, new media marketing, and ethical business leadership.

Applying the marketing model of the consumer journey funnel to music, Howard says that, in return for their music, artists should push streaming services to deliver exposure as well as data about users that might help artists to better target their approach to those most likely to become loyal fans.

“You can’t make money until there’s a repeat customer,” Howard says. “These are the only customers that can sustain you in a way that will make your career work.” Howard views a narrow focus on streaming payouts as a potential distraction from that core loyal fan development goal.

Howard’s BTOT presentation began with a stipulation that he does not “believe that anyone other than markets knows what fair values are” for a piece of recorded music. Howard is careful to note that he isn’t suggesting current streaming payout rates are fair—just that he isn’t sure how one would go about defining “fair.” It is this “fairness” stipulation that draws some opposition, even among other Berklee faculty.

Andrea Johnson: Artists Should Push for Fair Streaming Payments

Establishing a “fair” system of streaming payments is crucial and possible, according to Berklee associate professor of music business/management Andrea Johnson. Johnson, whose music licensing work includes valuing song catalogues, points to potential benchmarks such as a song’s Billboard chart popularity, film or commercial placements, receipt of major awards like Grammys, and length of sustained popularity.

Johnson, who teaches courses in music licensing, record company operations, and business management, notes that the U.S. government has established minimum rates for streaming payments, but says that, due to the fact that most major label contracts do not provide artists with a significant degree of control, “for most artists, the minimum rate has ended up being the only rate.”

“I’d like to see almost like a union agreement that says, ‘This is what you have to pay, but the artist is free to negotiate above that,’” Johnson says.

In Johnson’s view, the argument that streaming services cannot pay more to artists because these services are not yet profitable is not valid.

“These businesses still need to value the content and realize that without that content, they wouldn’t have a business,” Johnson says. “I’m training students here at Berklee to think equitably and to understand that the partnership has to work for both parties,” Johnson says. “We spend a lot of time strategically and creatively thinking about this, because these students are the next music executives.”

Don Gorder: Berklee Students Will Shape the Future of Streaming Music

For Don Gorder, chair of the Music Business/Management Department at Berklee, the fact that music business faculty members have a range of viewpoints on streaming music is “a good thing” because “what it shows the student is that reasonable minds differ.” Gorder believes it is important to acknowledge the uncertainty in the streaming field even as students and faculty strive to better understand it. There is no question that it’s a crowded field; in addition to the new Beats Music and Spotify, other competitors include iTunes Radio, Pandora, Google Play, Rdio, Rhapsody, Deezer, and Songza. YouTube, which is owned by Google, reportedly also plans to launch a streaming music service incorporating video this year.

“There are all these ‘maybes’ and ‘ifs’ in this space, so I can see it from all these different angles, but I’m as mystified as anybody else as to whether one of these companies is going to take hold and gain the critical mass of subscribers that they need to one, be profitable, and two, pay out a better share to the creative community,” Gorder says.

As he surveys the landscape, Gorder sees an industry that is not dying but changing—an industry requiring students to remain curious and to keep searching.

“If a student is interested in going into the music industry, I’d encourage them to consider the streaming industry as the section to go into, because there is going to be an incarnation here where this works,” Gorder says. “It’s going to be a different industry, and that industry needs you, the student, to bring a sense of how this whole new world of music is marketed and promoted. The older executives who are moving out don’t have those skills, but hopefully they’re savvy enough to bring people on board who do, and those are our students.”

Berklee faculty may not share a common vantage point on all aspects of interactive music streaming, but that leaves room for students to think critically about the issue for themselves. Many are already doing so, with some students publishing their ideas in Berklee’s Music Business Journal, and with the recent launch of Berklee's new Institute of Creative Entrepreneurship, more experimentation in the field is likely to follow.

“What we’re all teaching, regardless of our position on this, is that this is a great time for the music industry,” Gorder says, “and you can be a part of this movement while we’re still in the heat of the music industry’s digital evolution.”